22-1987-cv

Despotovich v. Republic of Croatia

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

Rulings by summary order do not have precedential effect. Citation to a summary order 

filed on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate 

Procedure 32.1 and this court’s Local Rule 32.1.1. When citing a summary order in a 

document filed with this court, a party must cite either the Federal Appendix or an 

electronic database (with the notation “summary order”). A party citing a summary order 

must serve a copy of it on any party not represented by counsel.

At a stated term of the United States Court of Appeals for the Second Circuit, 

held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the 

City of New York, on the 7th day of August, two thousand twenty-three.

PRESENT: Guido Calabresi,

Steven J. Menashi,

Eunice C. Lee,

Circuit Judges.

____________________________________________

MIRKO DESPOTOVICH, DBA TRADEXIM 

INTERNATIONAL CO. CALIFORNIA,

Plaintiff-Appellant,

TRADEXIM INTERNATIONAL COMPANY, 

AKA TRADEXIM INTERNATIONAL CO. 

CALIFORNIA,

Plaintiff,

v. No. 22-1987-cv

REPUBLIC OF CROATIA,

Defendant-Appellee.

____________________________________________
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For Plaintiff-Appellant: THOMAS BUTLER, White and Williams LLP, 

New York, NY.

For Defendant-Appellee: ALEXANDRA CHOPIN (Mitchell R. Berger, 

Morgan A. Miller, and Ellen H. Phillips, on 

the brief), Squire Patton Boggs (US) LLP, 

Washington, DC.

Appeal from an order of the United States District Court for the Southern 

District of New York (Torres, J.). 

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, 

ADJUDGED, AND DECREED that the judgment of the district court is 

AFFIRMED. 

Plaintiff-Appellant Mirko Despotovich has conducted business as Tradexim 

International Co. California (“Tradexim”) for several decades. Despotovich 

brought this action against the Republic of Croatia as the alleged alter ego of 

Gavrilovic Holding Petrinja d.o.o. (“Gavrilovic”), a company with which 

Tradexim had contracted. In this action, Despotovich seeks to enforce against 

Croatia a 2020 New York state judgment rendered against Gavrilovic. The district 

court dismissed the action under Federal Rule of Civil Procedure 12(b)(1) for lack 

of subject matter jurisdiction pursuant to the Foreign Sovereign Immunities Act 

(“FSIA”). This appeal followed. We assume the parties’ familiarity with the 

underlying facts and procedural history.

I

In 1990, Despotovich, operating as Tradexim, entered into a contract with 

Gavrilovic for 635 tons of canned ham to be delivered to the United States. The 

first batch, arriving in May 1990, contained bacteria and was returned. The second 

batch yielded the same result. Despotovich could not bring a claim for damages in 

the Socialist Federal Republic of Yugoslavia due to an ongoing war. Rather, 
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Despotovich brought suit in the U.S. District Court for the District of Columbia in 

1993, seeking recovery against Gavrilovic, its owners, Croatia, and others for 

breach of contract and fraud in relation to the spoiled ham. See Complaint, 

Despotovich v. Mesna Industrija Gavrilovic, No. 93-CV-978 (D.D.C. May 11, 1993), 

ECF No. 1. In his complaint, Despotovich alleged that, as part of the canned ham 

transaction, Gavrilovic had obtained a letter of guarantee from a bank, Privredna 

Banka Zagrab (“Privredna”), of which Croatia had subsequently assumed control. 

Despotovich argued that Croatia was liable for Privredna’s obligations under the 

letter of guarantee. In 1995, the district court dismissed the claims against Croatia 

on the grounds of sovereign immunity and the act-of-state doctrine. Despotovich

filed an appeal, which was dismissed because judgment had not been entered 

against all the defendants. See Despotovich v. A. Moksel AG, No. 96-7009, 1997 WL 

195486 (D.C. Cir. Mar. 14, 1997). No further appeal was taken.

Meanwhile, in July 1996, Despotovich filed another lawsuit against 

Gavrilovic in the Commercial Court of Zagreb in Croatia, which issued a judgment 

against Gavrilovic in 2000. One year later, the Commercial Court of Croatia 

affirmed the judgment. Soon thereafter, however, Gavrilovic was placed in 

bankruptcy proceedings that remain ongoing today. Despotovich sought to 

domesticate the Croatian judgment in Connecticut, but the Connecticut court 

dismissed the case on the ground that Despotovich had “not shown that the 

Croatian judgment satisfies the provisions of the [Uniform Foreign MoneyJudgments Recognition] Act and should be recognized and enforced in 

Connecticut.” Despotovic v. Gavrilovic Holding Petrinja, No. HHD-CV18-4086996-S, 

2018 WL 6016710, at *3 (Conn. Super. Ct. Oct. 29, 2018). Despotovich was more 

successful in New York, where a state court domesticated the judgment less than 

two years later. See Tradexim Int’l Co. Cal. v. Gavrilovic Holding Petrinja, Index 

No. 157495/2019 (Sup. Ct. N.Y. Cnty. Mar. 5, 2020), NYSCEF No. 17. 

This action was filed on January 4, 2021, in the U.S. District Court for the 

Southern District of New York against Croatia, seeking to enforce the New York 

judgment against Croatia on the ground that at “all relevant times” Croatia had

been the alter ego of Gavrilovic. J. App’x 11. The district court dismissed the action 
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for lack of subject matter jurisdiction because it concluded that Despotovich’s 

lawsuit was not based on commercial activity conducted by the foreign state in the 

United States but instead on “the non-payment of the 2020 New York judgment, 

which was based on the non-payment of the 2002 Croatian judgment.” Despotovich 

v. Republic of Croatia, No. 21-CV-50, 2022 WL 3447989, at *3 (S.D.N.Y. Aug. 17, 

2022). Accordingly, the district court determined that “there is not ‘a significant 

nexus between the commercial activity in this country upon which the exception 

is based and Plaintiff’s cause of action’” and therefore “this action does not fit 

within the first clause of the commercial activity exception to sovereign 

immunity.” Id. (alterations omitted) (quoting Kensington Int’l, Ltd. v. Itoua, 505 F.3d 

147, 155 (2d Cir. 2007)). Despotovich appealed.

II

“The standard of review applicable to district court decisions regarding 

subject matter jurisdiction under the FSIA is clear error for factual findings and de 

novo for legal conclusions.” U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co.,

Ltd., 241 F.3d 135, 150-51 (2d Cir. 2001). 

The FSIA “provides the sole basis for obtaining jurisdiction over a foreign 

state in the courts of this country.” Argentine Republic v. Amerada Hess Shipping 

Corp., 488 U.S. 428, 443 (1989). The FSIA provides that “a foreign state shall be 

immune from the jurisdiction of the courts of the United States and of the States 

except as provided in” enumerated exceptions. 28 U.S.C. § 1604. Thus, 

“[s]overeign immunity from suit is the default rule, subject only to specific 

exceptions.” Barnet as Tr. of 2012 Saretta Barnet Revocable Tr. v. Ministry of Culture 

& Sports of the Hellenic Republic, 961 F.3d 193, 199 (2d Cir. 2020). The plaintiff “has 

the burden of going forward with evidence showing that, under exceptions to the 

FSIA, immunity should not be granted.” Kensington Int’l, 505 F.3d at 153 (quoting 

Cabiri v. Gov't of the Republic of Ghana, 165 F.3d 193, 196 (2d Cir. 1999)).

Despotovich argues that this case falls under the FSIA’s commercial activity 

exception, which provides jurisdiction over cases “in which the action is based 

upon a commercial activity carried on in the United States by the foreign state; or 
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upon an act performed in the United States in connection with a commercial 

activity of the foreign state elsewhere; or upon an act outside the territory of the 

United States in connection with a commercial activity of the foreign state 

elsewhere and that act causes a direct effect in the United States.” 28 U.S.C. 

§ 1605(a)(2). In other words, even if we were to assume—as the district court did 

not—that this action is based on the canned ham transaction with Gavrilovic in 

1990, the commercial activity exception requires the 1990 transaction to have been 

conducted by Croatia or to have been conducted in connection with commercial 

activity of Croatia elsewhere.

Despotovich suggests that we can conclude that Croatia effectively signed

and breached the 1990 contract because it was the alter ego of Gavrilovic at that 

time, given that Croatia allegedly “at all relevant times completely dominated and 

controlled Gavrilovic.” J. App’x 11; see Gater Assets Ltd. v. AO Moldovagaz, 2 F.4th 

42, 55 (2d Cir. 2021) (explaining that an “alter ego relationship” may be established 

“‘where a corporate entity is so extensively controlled by its owner that a 

relationship of principal and agent is created’ or where recognizing the 

instrumentality’s separate juridical status ‘would work fraud or injustice’”) 

(quoting First Nat. City Bank v. Banco Para El Comercio Exterior de Cuba (Bancec), 462 

U.S. 611, 628-29 (1983)). 

We disagree. Croatia did not exist as an independent state until October 8, 

1991, after the canned ham contract was executed and breached. Despotovich 

himself alleges in his First Amended Complaint that “until 1991 the state-owned 

(or social owned) Gavrilovic Holding was actually managed and controlled by 

Borislav Mikelic, a member of the Central Committee of the League of 

Communists of Yugoslavia.” J. App’x 16. Thus, whatever Despotovich may be able 

to show about the relationship between Croatia and Gavrilovic at a later point, he 

cannot establish that Croatia was the alter ego of Gavrilovic at the time of the 

canned ham transaction in 1990.1 And that transaction is the crucial commercial 

1 Nor can Despotovich establish that Croatia succeeded to whatever possible liabilities could be 

assigned to the Socialist Federal Republic of Yugoslavia.
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activity on which jurisdiction is purportedly based. Because that activity cannot 

be attributed to Croatia, jurisdiction is lacking, and the case must be dismissed.

We are not persuaded by Despotovich’s argument that jurisdictional 

discovery might somehow establish an alter ego relationship between Croatia and 

Gavrilovic even in 1990. “Because the purpose of sovereign immunity is to protect 

foreign nations not only from liability but also from ‘the expense, intrusiveness, 

and hassle of litigation, a court must be circumspect in allowing discovery before 

the plaintiff has established that the court has jurisdiction over a foreign sovereign 

defendant under the FSIA.’” Beierwaltes v. L’Office Federale De la Culture De La 

Confederation Suisse, 999 F.3d 808, 828 (2d Cir. 2021) (quoting Arch Trading Corp. v. 

Republic of Ecuador, 839 F.3d 193, 206 (2d Cir. 2016)). We agree with the district 

court that Despotovich fails to identify information that could plausibly establish 

jurisdiction here. 

* * *

We have considered Despotovich’s remaining arguments, which we 

conclude are without merit. We affirm the judgment of the district court. 

FOR THE COURT:

Catherine O’Hagan Wolfe, Clerk of Court